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MENA Region > MENA Morning Bell > July 2011 > Tue the 12th
Egypt
Egypt-Israel gas pipeline explodes, again
Upper wage limit set for the first time for government employees; minimum wage at EGP684
PM announces cabinet reshuffle to be made by end of week
New compromise on constitution maybe possible
UAE officials to visit Egypt to discuss USD3 billion support package
EMG to pursue legal action
Jordan considers Iranian offer to overcome Egypt gas supply interruption
CBE to offer EGP6 billion in 7-day repos today
Former agriculture minister to be detained for importing cancer-causing pesticides
GB Auto releases 2Q2011 KPI; signals quarter will be healthy in terms of sales, with strong q-o-q growth to be recorded
Saudi Arabia
Al-Rajhi Bank announces 2QFY11 financial results
SAMBA Financial Group announces 2QFY11 financial results
Saudi Hollandi Bank announces 2QFY11 financial results
Riyad Bank announces 2QFY11 financial results
Saudi Kayan announces 2Q2011 results with a net loss, falling short of expectations
Almarai CFO to step down, but to remain in management
Abdullah A.M. Al-Khodari Sons Co. announces signing of JV with Al-Yamama Co. and Al-Kifah Group
UAE
UAE markets under review for a possible S&P upgrade to Emerging Market status
Dubai completes USD800 million financing facility to fund RTA projects
UAE widens voter pool for upcoming advisory body elections
MAF to raise USD1 billion in debt
Air Arabia introduces 4-weekly flights to Gassim, Saudi Arabia, from its Sharjah hub
NBAD repurchases AED5 million in 2018 convertible notes
FGB sets up USD3.5 billion Islamic trust certificate programme
Bank of Sharjah hires banks to arrange USD100 million loan
Kuwait
Government keeping a close watch of basic commodity prices
Kuwait Airways privatization committee completes survey of human capital requirements of the airlines
GCC
GCC SecGen rules out reports of delaying implementation of GCC Customs Union
Full Stories
Egypt
Egypt-Israel gas pipeline explodes, again
The natural gas pipeline connecting Egypt with Israel exploded, for the fourth time since the beginning of 2011, in the early hours of Tuesday, Egyptian state-TV reported. A huge blast caused the pipeline to catch on fire, and at the time of reporting fire fighters were trying to put out the flames. A government official was quoted by State TV as saying that the explosion was done in the same manner of the previous three explosions, but the impact was bigger due to the size of the pipeline at that particular pipeline station located at al-Taweel area, South of Arish.
Upper wage limit set for the first time for government employees; minimum wage at EGP684
The Ministry of Finance has set an upper wage limit for government employees of 36 times the salary of the lowest; al-Ahram online portal reported, citing a ministry press release. Egypt’s latest budget had set the minimum, lowest wage at EGP684/month. Under the new system, top ranking government officials would, thus, be entitled to a maximum of around EGP25,000/per month. The ministry, however, made no mention of incentives and restrictions on bonuses which top officials could compensate the diminished salary base by.
PM announces cabinet reshuffle to be made by end of week
In his awaited address to the Egyptian people last night, Prime Minister Sharaf has made a number of announcements, including that cabinet reshuffle would be made before the end of the week, according to the statement made on State TV. A change in a number of governors would also be taking place before end of July 2011. Sharaf indicated that instructions were given to the Minister of Interior to accelerate the restructuring process of the ministry, remove the officers accused of killing protesters and restore security on the streets. The judiciary body has also been urged, Sharaf explained, to be more transparent in its trials of the former regime symbols and those accused of killing protesters. Finally, Sharaf said that he would personally head the fund that would disburse compensations to the families of the revolution martyrs. In response, protesters who had been angry at the slow pace of reforms and who listened to the PM’s speech on loudspeakers in Tahrir square have immediately rejected the statement, Reuters reported.
New compromise on constitution maybe possible
Egypt’s Supreme Council for Armed Forces (SCAF) has indicated its willingness to discuss a proposed compromise regarding the new constitution, al-Masry al-Youm reported, citing a member of the National Accord Conference, who met with Sami Annan, Vice President of SCAF. This comes in response to the ongoing debate between some political group’s calling for drafting a new constitution before holding parliamentary elections, and others preferring to hold the elections first, as stipulated in the SCAF approved interim constitution. To that end, Annan has received a proposed document containing general principles of the new constitution, after it was discussed by all political groups. The NAC member said Annan believed SCAF could amend or endorse these principles before the elections slated to take place in September 2011.
UAE officials to visit Egypt to discuss USD3 billion support package
UAE officials are expected to visit Cairo in July 2011 to discuss USD3 billion support package to the Egyptian economy, Reuters reported, citing the Minister of Finance, Samir Radwan. “We had a USD3 billion package from the Emirates last week. They are coming to discuss the details in the third week of this month,” Radwan said, adding that some of the cash could be used for budgetary support although he indicated that this was yet to be discussed during the meeting.
EMG to pursue legal action
International shareholders in East Mediterranean Gas Company (Thailand's PTT, Israel's Merhav Group, Ampal-American Israel Corp) have decided to seek protection from the international court of arbitration in Washington, and are pushing ahead with legal claims against Egypt for USD8 billion in damages from contract violations in gas supplies, Reuters reported, citing an EMG BOD member, Nimrod Novik. This follows the recent interruption of gas exports to Israel, after the July 4th attack on the pipeline which, though resumed, supplies are only at 30% of original quantities. This news, however, was reported prior to late last night's explosion at the gas pipeline which represents the fourth attack on the pipeline. Novik explained that failure to deliver contracted quantities has, so far, caused USD500 million in losses to Egypt, in addition to the problems facing Israel’s energy market, which relies heavily on Egyptian gas. The international shareholders’ lawyers were instructed “to take the steps required for claims in excess of USD8 billion”. The Egyptian and US governments were notified of the process. The arbitration requires EMG to meet with their Egyptian counterparts within weeks to try and reach a settlement outside of court, according to a representative of EMG shareholders. If they fail, the U.S. court will take over within weeks of the meeting. According to Novik, the price paid by EMG for Egyptian gas is “higher than that of any other Egyptian export venue, is better than other regional exporters receive and is in line with international prices.”
Jordan considers Iranian offer to overcome Egypt gas supply interruption
Jordan is studying an offer from Iran to supply natural gas to overcome the current supply interruption, al-Ahram online portal reported, citing Jordanian Minister of Energy Khaled Toukan. No price has yet been floated by Iran, Toukan said also explaining that Iran’s offer is one of a number of options which Jordan is considering including supplies from Russia and Qatar, as it continues its negotiations with Egypt on a final price and quantity. The duration of natural gas interrupted supply from Egypt to Jordan has amounted to 82 days since the beginning of 2011.
CBE to offer EGP6 billion in 7-day repos today
The Central Bank of Egypt (CBE) will offer EGP6 billion in seven-day repos in the market today, Tuesday July 12th, at a fixed rate of 9.25%, Reuters reported. Last week, the CBE auctioned EGP6 billion, but accepted only EGP1.606 billion.
Former agriculture minister to be detained for importing cancer-causing pesticides
An investigating judge has ordered Egypt’s former agriculture minister, Youssef Wali, be detained for questioning over accusations that he permitted the import of carcinogenic pesticides, Reuters reported citing state news agency MENA. Wali is accused of "bringing in 37 brands of pesticides that were proven to cause cancer". The report said the chemicals were banned from entering the country in 1996, but were allowed entry in 1998 under Wali until 2004. Wali is also being accused of squandering EGP200 million of state funds by selling a plot of land to businessman Hussein Salem (currently arrested in Spain) for less than the market price.
GB Auto releases 2Q2011 KPI; signals quarter will be healthy in terms of sales, with strong q-o-q growth to be recorded
GB Auto (AUTO EY, Current Price: EGP30.78, Target Price: EGP32.00, Hold, P/E FY11e: 15.9x) released 2Q2011 Key Performance Indicators (KPI), stating that Egypt passenger car (PC) sales volumes reached 10,868 vehicles, -16% y-o-y, and +72% q-o-q; Iraq PC sales volumes reached 6,308 vehicles, +9% y-o-y, and +7.5% q-o-q, and Motorcycle and Three-wheeler sales volumes reached 18,299 units sold, +64% y-o-y, and +26.5% q-o-q. On the other hand, commercial vehicles (CV) reached record highs during the quarter, at 18,299 units sold, +64% y-o-y, and +26.5% q-o-q. Financing business revenues reached more than 2x y-o-y, and +20% q-o-q, and tire sales increased by 140% y-o-y, and 36% q-o-q. Comment: Based on the given KPI, we like GB Auto’s 2Q2011 performance, and we believe the company will report a strong sales figure in the quarter. As we had expected, 2Q2011 sales volumes grew strongly q-o-q, and we expect this trend to continue until the end of 2011. We believe GB Auto is on track to meet our 2Q2011 revenue figure of EGP1,700 million. Moreover, we estimate GB Auto to record a 2Q2011 net profit figure of EGP40 million, implying a NPM of 2.4%. We believe this figure is achievable, unless the company records an abnormal provision expense, which will add further pressure to the margins. Management indicated that 2Q2011 NPM would be constrained by FX losses and provisions.
Saudi Arabia
Al-Rajhi Bank announces 2QFY11 financial results
Al Rajhi Bank (RJHI AB, Current Price: SAR75.50, Target Price: SAR80.32, Add, P/E FY11e: 14.1x) announced its financial results for 2QFY11. Net profit for 2QFY11 reached SAR1,843 million against SAR1,799 million for the same quarter of 2010. We had estimated a net income of SAR2,098 million, higher than the reported figures, mainly on lower provisions and operating expenses than the actual results. Total operating income for 2QFY11 reached SAR3,051 million against SAR2,999 million for the same quarter of 2010. We had estimated an operating income of SAR3,125 million for 2QFY11. Total assets recorded SAR214.6 billion as of June 30th, 2011 against SAR177.3 billion for the same period in 2010. Loans and advances reached SAR127.8 billion as of June 30th, 2011 against SAR118.9 billion for the same period in 2010. The bank has announced a dividend distribution of SAR1.25 per share after the deduction of Zakat for 1HFY11. This translates into a full year dividend yield of 3.3% after the deduction of Zakat. Comment: The increase in the bank’s profitability, in comparison to the same period in 2010, is mainly attributable to the higher banking income.
SAMBA Financial Group announces 2QFY11 financial results
SAMBA Financial Group (SAMBA AB, Current Price: SAR49.50, Target Price: SAR66.95, “Add”, P/E FY11e: 10.9x) has announced its financial results for 2QFY11. Net profit for 2QFY11 reached SAR1,102 million against SAR1,220 million for the same quarter of 2010. We had estimated a net income of SAR1,224 million, which is higher than the reported figures due to the lower-than-expected interest income. Total operating income for 2QFY11 reached SAR1,635 million against SAR1,772 million for the same quarter of 2010. We had estimated an operating income of SAR1,728 million for 2QFY11, which is higher than the reported figures due to the lower-than-expected interest income. Total assets came in at SAR190.6 billion against SAR188.4 billion as at end of June 2010. Loans and advances reached SAR82.4 billion against SAR82.7 billion as at end of June 2010 as the bank is following a conservative lending strategy. Comment: The decrease in profitability is attributable to decrease in interest income of the bank as the bank saw no growth in its lending portfolio, and also witnessed a decline in net interest margins.
Saudi Hollandi Bank announces 2QFY11 financial results
Saudi Hollandi Bank (AAAL AB, Current Price: SAR29.40, Target Price: SAR40.22, “Buy”, P/E FY11e: 11.0x) has just announced its financial results for 2QFY11. Net profit for 2QFY11 reached SAR263.3 million against SAR250.5 million for the same quarter of 2010. We had estimated a net income of SAR265 million, in line with the reported figures. Total operating income for 2QFY11 reached SAR495.2 million against SAR478.8 million for the same quarter of 2010. We had estimated an operating income of SAR475 million for 2QFY11, in line with the reported figures. Total assets recorded SAR51,976 million as of June 30th, 2011 against SAR59,461 million a year ago. Loans and advances reached SAR34,917 million as of June 30th, 2011 against SAR35,241 million as at end of June 2010. Comment: The increase in profitability is mainly attributable to the higher interest income for the bank.
Riyad Bank announces 2QFY11 financial results
Riyad Bank (RIBL AB, Current Price: SAR24.55, Target Price: SAR29.60, Add, P/E FY11e: 10.5x) announced its financial results for 2QFY11. Net profit for 2QFY11 reached SAR836 million (+12.8% q-o-q and +9.2% y-o-y) against SAR766 million for the same quarter of 2010. We estimated 2QFY11 net income to record SAR893 million, which is higher than the reported figures due to higher provisions and operating expenses than what we had estimated. Total operating income for 2QFY11 reached SAR1,570 million against SAR1,527 million for 2Q2010. We estimated 2QFY11 operating income to be SAR1,575 million which is close to the reported results. Total assets recorded SAR177,534 million as of June 30th, 2011 against SAR169,337 million for the same period in 2010. Loans and advances reached SAR110,576 million as of June 30th, 2011 against SAR104,744 million for the same period in 2010. Comment: The increase in the bank’s profitability, in comparison to the same period in 2010, is mainly attributable to the increase in the bank’s interest income, fee and commission income, coupled with a decline in operating expenses.
Saudi Kayan announces 2Q2011 results with a net loss, falling short of expectations
Saudi Kayan Petrochemical Co. (KAYAN AB, Current Price: SAR18.05, Not Rated, P/E FY11e: 28.65x) announced today its results for 2Q2011, with a net loss of SAR 16.01 million, compared to a loss of SAR8.33 million during 1Q2011. The company attributed the increase in loss to an increase in Zakat provisions. Comment: The net loss posted during the quarter is much higher than consensus estimates, a loss of SAR5 million for the quarter.
Almarai CFO to step down, but to remain in management
In a conference call held on Monday, July 11th, 2011, Almarai’s (ALMARAI AB, Current Price: SAR92.25, Not Rated, Consensus P/E FY11e: 15.56x) CFO, Georges Shorderet, announced that he would be stepping down as the company’s CFO during the coming few weeks, but adding that he would be staying with Almarai in a senior management position.
Abdullah A.M. Al-Khodari Sons Co. announces signing of JV with Al-Yamama Co. and Al-Kifah Group
Abdullah A.M. Al-Khodari Sons Co. (ALKHODAR AB, Current Price: SAR71.21, Not Rated, P/E FY10a: 13.9x) announced the signing of a JV with two companies, namely Al-Yamama Company and Al-Kifah Group. The purpose of the JV is to bid for a security services installations project jointly throughout Saudi Arabia.
UAE
UAE markets under review for a possible S&P upgrade to Emerging Market status
The UAE is under review for a possible upgrade to Emerging Market status from Frontier Market in the country classification for the S&P Global Equity Index Series in 2012, Gulf News reported. The consultation period is expected to be concluded by August 26th, and the decision announcement would be made during 1Q2012. “We are proposing that the UAE be considered an emerging market, as it meets all of our quantitative criteria to qualify as an emerging market,” an S&P document said. S&P's country classification depends on a range of factors, including macroeconomic conditions, political stability, legal property rights and procedures, and trading and settlement processes and conditions. Furthermore, the opinions and experiences of institutional investors are critically important in determining whether a market should be classified as developed, emerging, or frontier.
Dubai completes USD800 million financing facility to fund RTA projects
Dubai has completed a USD800 million financing facility that will fund Roads and Transportation Authority (RTA) projects in the Emirate, Khaleej Times reported. The deal is structured against proceeds from Dubai’s road toll system: Salik. “The deal was completed on July 5 and the response was strong enough to allow the government to reduce the margin to 325 basis points above the London interbank offered rate from 350 basis points,” Bloomberg said, quoting the MEED website. Emirates NBD, Commercial Bank of Dubai, Citibank, and Dubai Islamic Bank, are managing the transaction.
UAE widens voter pool for upcoming advisory body elections
The UAE has increased the number of eligible voters for the upcoming September 24th Federal National Council (FNC) elections to 129,000 from a previously planned 80,000, Reuters reported. This represents a big leap from the 7,000 Emiratis who voted for half the FNC members (i.e. 20 out of a total of 40 members) of the previous council, since the other half is appointed by the rulers of the UAE. "The Emirates, through this big step towards expanding the number of members of electoral committees, confirms that it is moving towards promoting political participation," Minister of State Anwar Mohammed Gargash said in a statement.
MAF to raise USD1 billion in debt
Majid al-Futtaim (MAF) is planning to raise USD1 billion in three to five year loans, Emirates Business 247 reported, citing sources familiar with the deal. The funds, a three-year tranche revolving facility and a five-year term loan, will be used to refinance a debt maturing in 2012, and will be priced at 275 bps over Libor. Barclays, Standard Chartered, Emirates NBD and Crédit Agricole were invited to participate in the loan. This news follows MAF pushing back a bond issue citing market conditions, although sources indicate that the planned debt will not replace the bond plan.
Air Arabia introduces 4-weekly flights to Gassim, Saudi Arabia, from its Sharjah hub
Air Arabia (AIRARABI UH, Current Price: AED0.69, Not Rated, Consensus P/E FY11e: 11.13x) will launch four weekly flights to Gassim, Saudi Arabia, from its Sharjah hub, starting July 15th, 2011. This is the 4th new destination added by Air Arabia in two months, as it added flights to Riyadh, Dammam, and Istanbul from its Alexandria hub in early June 2011.
NBAD repurchases AED5 million in 2018 convertible notes
National Bank of Abu Dhabi (NBAD) (NBAD UH, Current Price: AED11.15, Target Price: AED14.10, Add, P/E FY11e: 7.3x) repurchased AED5 million in its 2018 convertible notes, reducing its outstanding principal to AED1.4 billion.
FGB sets up USD3.5 billion Islamic trust certificate programme
First Gulf Bank (FGB) (FGB UH, Current Price: AED18.00, Target Price: AED21.80, Add, P/E FY11e: 8.7x) has set up a USD3.5 billion Islamic trust certificate programme, Bloomberg reported.
Bank of Sharjah hires banks to arrange USD100 million loan
Bank of Sharjah (BOS UH, Current Price: AED1.94, Not Rated, P/E FY11e: N/A) hired several banks to arrange for a USD100 million loan for “general corporate purposes.” The two-year issue will replace the one-year USD150 million loan that will be repaid on maturity on July 29th.
Kuwait
Government keeping a close watch of basic commodity prices
The Ministry of Commerce and Industry has reiterated its close watch and inspection of prices of basic commodities domestically to protect consumers, KUNA reported, citing Minister Amani Buresli. "Despite the efforts of the ministry, the prices of basic goods do increase on a global scale due to the increase in cost, coupled with increase in demand, as well as due to factors including custom duties and geo-environmental conditions. This most particularly affects non-subsidized goods," the minister explained. The ministry conducts a regular survey of prices against a weekly update of the FAO index of basic foodstuff and produce prices, indicating that legal action would be taken against violators of law pertaining to illegal increases in prices and cheating customers.
Kuwait Airways privatization committee completes survey of human capital requirements of the airlines
The Privatization Committee of Kuwait Airways has completed a survey reviewing human resources requirements to ensure operational effectiveness of Kuwait Airways is maintained once the privatisation process has commenced, KUNA reported, citing a press statement. The survey was undertaken by aviation consultancy Seabury, whose responsibility includes the analysis of KAC's existing and short-term human capital requirements. In accordance with the Kuwaiti law, KAC has approached all Kuwaiti nationals employed by KA and its subsidiaries (approx. 2,600 individuals) to ascertain their preference for the future role with the Company, offering them one of three choices: Moving to the new operating company, retiring if qualified, or transferring to another government entity.
GCC
GCC SecGen rules out reports of delaying implementation of GCC Customs Union
The GCC has asserted that conditions of the GCC Customs Union have been met by most GCC countries, but member states still need to agree on some issues, Bahrain News Agency reported, citing a GCC Secretariat General statement. The statement further ruled out reports about delaying the full implementation of the Union, adding that setting up a collective economic project as such requires steady and well-studied actions.
Calendar
Egypt
12 Jul 11 - Saudi Egyptian Investment & Finance's ex-date for EGP1.00 cash dividend
14 Jul 11 - Saudi Egyptian Investment & Finance's distribution date for EGP1.00 cash dividend
26 Jul 11 - Sinai Cement's AGM
26 Jul 11 - Modern Shorouk Printing & Packaging's AGM & EGM
18 Aug 11 - El Nasr Transformers (El Maco)'s distribution date for EGP0.0875/share cash dividend (2nd tranche)
15 Sep 11 - October Pharma's AGM
26 Sep 11 - Electro Cable Egypt's distribution date for EGP0.025/share cash dividend (2nd tranche)
29 Sep 11 - Maridive & oil services' distribution date for USD0.03/share cash dividend (2nd tranche)
30 Sep 11 - Minapharm Pharmaceuticals' distribution date for EGP1.15/share cash dividend (2nd tranche)
27 Oct 11 - El Nasr Transformers (El Maco)'s distribution date for EGP0.0875/share cash dividend (3rd tranche)
31 Oct 11 - Delta for Printing & Packaging's distribution date for EGP2.0/share cash dividend (2nd tranche)
30 Nov 11 - National Company for Maize Products' distribution date for EGP0.55/share cash dividend (2nd tranche)
08 Dec 11 - El Nasr Transformers (El Maco)'s distribution date for EGP0.0875/share cash dividend (4th tranche)
Saudi Arabia
14 Jul 11 - Riyad Bank's ex-date for SAR0.55/share cash dividend
14 Jul 11 - Saudi Arabia Fertilizers Company's ex-date for SAR6.0/share cash dividend
16 Jul 11 - Yamamah Saudi Cement Company's distribution date for SAR2.0/share cash dividend
16 Jul 11 - Banque Saudi Fransi's distribution date for SAR0.75/share cash dividend
17 Jul 11 - Tabuk Cement Company's ex-date for SAR0.90/share cash dividend
19 Jul 11 - Al Rajhi Bank's ex-date for SAR1.25/share cash dividend
20 Jul 11 - The Qassim Cement Company's distribution date for SAR2.25/share cash dividend
20 Jul 11 - Saudi Cement Company's distribution date for SAR2.0/share cash dividend
21 Jul 11 - Southern Province Cement Company's ex-date for SAR2.75/share cash dividend
23 Jul 11 - Southern Province Cement Company's distribution date for SAR2.75/share cash dividend
23 Jul 11 - Saudia Dairy & Foodstuff Company's distribution date for SAR3.0/share cash dividend
25 Jul 11 - Saudi Vitrified Clay Pipes Company's distribution date for SAR2.0/share cash dividend
25 Jul 11 - Riyad Bank's distribution date for SAR0.55/share cash dividend
25 Jul 11 - Al Rajhi Bank's distribution date for SAR1.25/share cash dividend
27 Jul 11 - Saudi Arabia Fertilizers Company's distribution date for SAR6.0/share cash dividend
31 Jul 11 - Arabian Cement Company's distribution date for SAR1.0/share cash dividend
01 Aug 11 - Advanced Polypropylene Company's distribution date for SAR1.0/share cash dividend
01 Aug 11 - Herfy Food Services Company's EGM
02 Aug 11 - Herfy Food Services Company's ex-date & distribution date for 1:9 stock dividend (subject to shareholders' approval)
06 Aug 11 - Etihad Atheeb Telecommunication Company 's EGM
17 Aug 11 - Makkah Construction & Development Company's AGM
UAE
13 Jul 11 - First Gulf Bank's BOD meeting to discuss 2Q2011 results
14 Jul 11 - Deyaar Development's BOD meeting
14 Jul 11 - Global Investment House's BOD meeting to discuss 2Q2011 results
19 Jul 11 - SHUAA Capital's EGM
19 Jul 11 - Gulfa Mineral Water & Processing Industries Company's BOD meeting to discuss 2Q2011 results
27 Jul 11 - Al Firdous Holding's AGM
04 Aug 11 - Grand Real Estate Projects Company's AGM
11 Aug 11 - Gulf Finance House's BOD meeting
Qatar
14 Jul 11 - Vodafone Qatar's 1Q FY2011-2012 results announcement
18 Jul 11 - Al Ahli Bank's 2Q2011 results announcement
18 Jul 11 - Al khalij Commercial Bank's 2Q2011 results announcement
19 Jul 11 - Qatar Gas Transport Company (Nakilat)'s 2Q2011 results announcement
19 Jul 11 - Doha Bank's 2Q2011 results announcement
19 Jul 11 - Qatar Gas Transport Company (Nakilat)'s 2Q2011 results announcement
20 Jul 11 - Mazaya Qatar Real Estate Development's 2Q2011 results announcement
20 Jul 11 - Qatar Islamic Bank's 2Q2011 results announcement
21 Jul 11 - Gulf Warehousing Company's 2Q2011 results announcement
24 Jul 11 - Islamic Holding Company's 2Q2011 results announcement
24 Jul 11 - Qatar General Insurance and Reinsurance Company's 2Q2011 results announcement
24 Jul 11 - Qatar International Islamic Bank's 2Q2011 results announcement
24 Jul 11 - Qatar Navigation Company's 2Q2011 results announcement
26 Jul 11 - Al khalij Commercial Bank's 2Q2011 results conference call
27 Jul 11 - Commercial Bank of Qatar's 2Q2011 results announcement
27 Jul 11 - United Development Company's 2Q2011 results announcement
27 Jul 11 - Dlala Holding Company's 2Q2011 results announcement
28 Jul 11 - Qatar National Bank's 2Q2011 results conference call
31 Jul 11 - Medicare Group's 2Q2011 results announcement
31 Jul 11 - Qatar Oman Investment Company's 2Q2011 results announcement
01 Aug 11 - National Leasing Holding's 2Q2011 results conference call
02 Aug 11 - Masraf Al Rayan's 2Q2011 results announcement
09 Aug 11 - Masraf Al Rayan's 2Q2011 results conference call
14 Aug 11 - Doha Insurance Company's 2Q2011 results announcement
14 Aug 11 - Qatar Telecom Company's 2Q2011 results announcement
|
Forex Rates |
|
|
USD/AED |
3.6731 |
|
USD/BHD |
0.3770 |
|
USD/CHF |
0.8350 |
|
USD/EGP |
5.9500 |
|
USD/EUR |
1.4054 |
|
USD/GBP |
1.5965 |
|
USD/ILS |
3.4380 |
|
USD/JOD |
0.7078 |
|
USD/JPY |
80.4250 |
|
USD/KWD |
0.2752 |
|
USD/MAD |
8.0169 |
|
USD/OMR |
0.3850 |
|
USD/QAR |
3.6415 |
|
USD/SAR |
3.7503 |
|
USD/TND |
1.3942 |
Key Shareholder Transactions - Egypt (July 10th, 2011)
|
Company |
Shareholder |
Position |
Action |
No. of Shares |
|
Advanced Pharmaceutical Packaging |
Mohamed Mohamed Adly Raaf |
Chairman & CEO |
Sold |
200,000 |
|
Arab Ceramics (Aracemco) |
Sahar Mahmoud Morsi El Gohary |
Related Parties |
Bought |
9,935 |
|
Arab Cotton Ginning |
Amr Amin Fouad El Sawaf |
Board Member |
Sold |
500,000 |
|
Delta Insurance |
Yassin Yassin El Hamzawi |
Board Member |
Bought |
405 |
|
Egyptian Financial & Industrial |
Egyptian International Fund for Investment |
Related Parties |
Sold |
6,500 |
|
Egyptian Financial & Industrial |
Misr - Alex Fund for Financial Investment |
Related Parties |
Sold |
6,500 |
|
International Co. for Investment & Development |
Walid Said Abdel Moneim |
Board Member |
Sold |
3,500 |
|
Saudi Egyptian Investment & Finance |
Misr Insurance |
Board Member |
Sold |
237,767 |
|
Saudi Egyptian Investment & Finance |
Misr for Life Insurance |
Board Member |
Bought |
237,767 |
|
Universal for Paper & Packaging Materials (Unipack) |
Sar for Investment |
Board Member |
Sold |
192 |
|
Universal for Paper & Packaging Materials (Unipack) |
Gulf Arab Overseas Ltd. |
Board Member |
Sold |
50,000 |
|
Universal for Paper & Packaging Materials (Unipack) |
Gulf for Arabian Investment |
Board Member |
Sold |
19,080 |
Publications Update: July 2011
|
Report |
Main Highlights |
|
Egypt Inflation Monitor –June 2011
Annual urban headline inflation stabilises at 11.8 percent in June 2011 as the economic slowdown dilutes embedded inflationary pressures
(Nada Farid, July 11th)
|
· On an annual basis, urban headline inflation stabilised at 11.8% in June 2011, same as in May 2011, as the economic slowdown took its toll on domestic consumption.
· We had undermined the impact of the political instability on Egypt’s consumption patterns and, consequently, on inflation. We had expected that with the weakening of the Egyptian currency, and in tandem with global food price increases, inflationary pressures would intensify in Egypt in May and June.
· Annual core inflation increased, slightly, to 8.9% in June 2011 from 8.8% in May 2011. On a monthly basis, core inflation (which excludes volatile food items and regulated items) has actually decelerated from 0.5% in May 2011 to 0.45% in June 2011, indicating that volatile food items have led the monthly headline inflation in June 2011.
· During the next six months, we expect annual inflation to ease or at least stabilise at the current levels, as we expect more protests, demonstrations and strikes, as we approach this critical political phase in Egypt of Parliamentary and Presidential elections, which will, in turn, affect consumption and investment negatively. Having said that, we believe August to be an exception, on the back of the month of Ramadan, which usually witnesses higher consumption patterns.
· Provided that Egypt witnesses more political stability and clarity in 1H2012, we expect inflation to pick up, in tandem with the increasing global food prices and the depreciated currency, coupled with the already existing structural problems and bottlenecks.
· It is unlikely to see the Central Bank of Egypt (CBE) tightening its monetary policy in its upcoming Monetary Policy Committee (MPC) meeting on July 21st. Egypt’s fragile recovery and weak growth prospects and, in turn, subdued inflation during the next six months provide no justification for raising policy rates at the moment.
|
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Olympic Group (OG) Flashnote
Electrolux to acquire OG at EGP40.60
(Hamed Hesham & Ahmed Khalil, July 11th)
|
· Recommendation: Accept offer, deal Price: EGP40.60, Upside: 12.8%
· We believe the deal is positive for OG, its shareholders, and the market in general.
· As part of the deal, Electrolux will sell OG’s ownership in Namaa and B-Tech to Paradise Capital. The prices at which Namaa and B-Tech will be sold back to OG are EGP13.88 and EGP3.44 per share, respectively. Those are the same prices agreed upon under the pre-revolution deal, which were the closing prices as of the October 10th trading session. As of yesterday, July 10th, 2011, Namaa closed at EGP11.26 (23.3% discount from the deal price), while B-Tech closed at EGP2.77 (24.2% discount from the deal price).
· The unchanged prices of Namaa and B-Tech imply that the discount from the pre-revolution deal price is due to a drop in the white goods segment valuation (currently at EGP23.28, down from EGP27.98).
· Once the deal is finalised, OG will launch a mandatory tender offer to buy 100% of Delta for Engineering Industries (IDEAL), at a price per share of EGP21.40. According to OG management, OG owns c.99% of IDEAL’s shares; hence, the company will be tendering for the remaining 1%.
· The deal is expected to be finalised by end of July / early August, 2011.
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Net International Reserves Watch Egypt - June 2011
NIR shed USD659 million in June 2011, on narrowing BOP deficit & declining dollarisation
(Nada Farid, July 7th)
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· Egypt’s net international reserves (NIR) reached USD26.6 billion by end - June 2011, shedding USD659 million since end - May 2011, thereby recording its lowest level since April 2007.
· The loss of USD0.66 billion in NIR during June 2011 is in line with our expectations. We had forecast the balance of payments (BoP) deficit to narrow slightly in June 2011, reducing the financing requirement from NIR.
· The loss of USD0.66 billion in June 2011 signals a continued improvement in NIR contraction from previous months. This improvement reflects a rebound in Egypt’s sources of foreign exchange, namely exports and tourism, and is an indication of easing pressure on demand for foreign exchange during May and June 2011.
· With the complete depletion in unofficial reserves, Egypt will have to depend entirely on NIR to finance the foreign currency gap, whether related to the BoP deficit or increased dollarisation in the banking system.
· During 1HFY11/12, we expect a total of USD14 billion in additional demand for foreign currency. However, we believe the CBE will only use up to USD5 billion from its NIR in 1HFY11/12 to fill in the foreign currency gap. Consequently, we anticipate Egypt’s NIR will stand at USD20 billion by end FY11/12.
· By end- FY11/12, we forecast Egypt’s NIR to stand at USD20 billion.
· Egypt’s import cover fell to five months of imports by end - June 2011 from 6.9 months by end- April 2011 and 8.5 months by end- December 2010, exactly in line with our expectations.
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Quarterly Strategy 3Q2011 Strategy Note - Egypt & GCC
Selectivity at a time of high uncertainty
(Radwa El Swaify & Samah Dissi, July 7th)
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Overweight Qatar, Saudi Arabia and Abu Dhabi, with emphasis on banks and petrochemicals
· Qatar’s real growth outlook over the medium-term will largely be fuelled by robust government-led investments.
· We assign Saudi Arabia an overweight recommendation, with a focus on banks, whose earnings will pick-up in FY2011 on improved asset quality, and on petrochemicals.
· We are positive on the energy sector and banks within Abu Dhabi, where hydrocarbon wealth and infrastructure spending fuel growth.
Neutral/Hold Dubai and Oman
· Real growth is rebounding in Dubai as it benefits from the ongoing global economic recovery, but challenges facing the property sector and the ongoing restructuring of Dubai debt will continue to weigh down investor sentiment.
· With regard to Oman, higher oil production will continue to drive economic growth. The government will focus on diversifying away from oil and gas, and public spending should increase to meet public demands and increase employment.
Underweight Egypt and Kuwait
· We recommend underweight on Egypt, since the market performance will continue to be highly correlated to the political scene, and on the back of the high volatility expected close to Parliamentary elections, by the end of September 2011.
· We recommend an Underweight on Kuwait on the back of weak earnings potential in 2011 and multiples that are amongst the highest in the region.
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Jarir Marketing Company (Jarir) 2Q2011 Results Note
Electronics continue to boost sales and net profit growth
(Ahmed Khalil & Hamed Hesham, July 7th)
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· Recommendation: Add, Target Price: SAR190.00, Upside: 10.3%
· Jarir continues to impress us and beat our estimates, delivering strong numbers, with 2Q2011 sales being the highest ever in the company’s history, despite the 2nd quarter being a seasonal low for Jarir.
· Going forward, we expect Jarir will continue to reap the benefits of its expansion plan and stronger spending patterns in Saudi Arabia (26% of Saudi Arabia’s total spending in 2011 will be dedicated to the education sector, as well as employee training), as well as in the GCC.
· Despite the minimal upside potential, we see Jarir as a low-risk play into the lucrative Saudi Arabian consumer story, with limited downside risks and further growth to be driven by new store openings and higher spending patterns in Saudi Arabia and in the GCC.
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Qatar National Bank (QNB) 2Q2011 Results Note
All star 2Q11 performance on booming balance sheet, Maintain Add
(David Mikhail & Nancy Fahmy, July 6th)
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· Recommendation: Add, Target price: QAR163.70, Upside: 14%
· QNB has delivered an exceptional quarter. Notwithstanding the higher-than-expected provisioning, profitability rose on higher efficiency and higher interest, fee and commission, and investment income.
· We retain our target price of QAR163.70 and reiterate our “Add” recommendation. The stock is currently trading at P/E FY11f of 13.7x, and P/B FY11f of 2.3x.
· Our DECF target price discounts a net profit CAGR of 17% over the next five years. We estimate a bottom line growth of 17.5% for 2011 and 16% for 2012.
· For 2011, we forecast 15% loan growth and 25% deposits growth. Islamic deposits, which typically make up 15% of total deposits will be phased out by year-end due to the new regulations in the sector.
· We believe that QNB’s profitability will be pared slightly in 2012, compared to the previous years, on the absence of Islamic banking business (Islamic business comprised 13% of QNB’s profits in 2010). However, we see only a mild impact from the personal lending circular on the bank, as the segment only comprises 10% of the total loan book, of which 60% is directed to VIPs or non-salaried retail lending, which is unaffected by the new regulation.
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MoneScope: Egypt
Monetary aggregates in May 2011 reflect a slight rebound in confidence levels
(Nada Farid & David Mikhail, July 6th)
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· Broad money supply (M2) annual growth picked up, slightly, in May 2011 to reach 10.98%, as growth in local currency demand, time and savings deposits increased. M2’s annual growth has been decelerating since February 2011 from 12.2% to reach 10.8% in April 2011, albeit it is still at a healthy level compared to the single digits of 2009 and early 2010.
· Monetary aggregates in May 2011 reflect a slight rebound in confidence levels, whereby growth in money in circulation outside the banking system has eased for the first time since January 2011, growing by 25.8% y-o-y, down from 26.6% y-o-y in April 2011.
· Total deposits have increased by 8.4% y-o-y and by 0.6% m-o-m in May 2011, after growing by 8.1% y-o-y and contracting by 0.3% m-o-m in April 2011.
· Growth in domestic credit continues to decelerate, reaching 16.4% y-o-y in May 2011, down from an annual growth of 17.7% in April 2011, on the back of a slowdown in claims on the government, public business and households.
· As banks in Egypt cautiously and selectively lend to their key clients, we foresee marginal balance sheet growth in the rest of 2011 (in the range of 3%), helped by the strong growth witnessed in 1Q2011.
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Telecom Egypt Valuation Update
Bundling for Survival, Target price cut to EGP19.61, Maintain Buy
(Sally Gerges, July 4th)
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· Recommendation: Buy, Target Price: EGP19.61, Upside: 31.5%
· Bundling to add flavour to a saturated market: We foresee bundling to be the key stimulus for the Egyptian market’s growth, going forward, given the saturation in the mobile market (with penetration exceeding the 100% level), the significant untapped potential in broadband and the notable opportunity that could arise from cross selling of mobile, fixed and broadband services.
· Telecom Egypt is best positioned to capitalise on the bundling opportunity.
· The MVNO proposition yields a minimal upside, of 1.8%, to our current valuation.
· Telecom Egypt should pursue the MVNO model, owing to larger risks from abandoning it: Despite the insignificant value accretion, we still believe Telecom Egypt should work towards becoming a full-fledged telecom operator, in order to be better equipped to compete in the market’s new battlefield, namely bundling, as well as to shield its strong broadband market share.
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MoneScope: Saudi Arabia
Healthy monetary indicators in May 2011 signal a sustained economic pick-up
(Nada Farid & Fawad Siddiqui, July 4th)
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· Saudi Arabia’s broad money supply (M3) continues to grow y-o-y at an accelerated pace, albeit slowing down slightly to 16% in May 2011 from 17.2% in April 2011 to reach SAR1.175 trillion, on the back of a slowdown in growth in demand deposits and other quasi monetary deposits. On a monthly basis, M3 contracted by 0.1%. We believe the slight annual slowdown in M3 growth and the monthly contraction in M3 in May 2011 to be a one-off event.
· Saudi Arabia continues to strengthen its foreign asset position, with net foreign assets (NFA) growing at a record high of 15.5% y-o-y in May 2011 through increasing SAMA’s foreign currency and deposits abroad by a record 26% y-o-y and its investments in foreign securities by 12% y-o-y in May 2011.
· Growth in bank credit to the private sector increased to 7.1% in May 2011, the highest since May 2009. Growth in bank credit to the private sector has been picking up steadily since the beginning of 2011, averaging 6.3% YTD. This signals a healthy pick-up in the economy and reflects increased confidence levels that have encouraged banks to start lending again.
· Despite the significant growth in money supply in April and May 2011, inflationary pressures remain relatively subdued. Saudi Arabia’s annual inflation slowed to 4.6% in May 2011, down from 4.8% in April 2011, way below the peak in August 2010 of 6.1%.
· We believe that Saudi banks’ NPL ratios have peaked and their aggressive provisioning cycle has come to an end, and are now ready for growth; thus, we expect improved profitability and higher dividends for 2011. Credit growth has been relatively weak for the sector as a whole YTD on slower corporate lending. Therefore, we favour more-retail focused banks, since they have higher growth prospects.
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For further questions, please call your usual sales contact, or Beltone Research, through: research@beltonefinancial.com, or +202 353 10 200.
Thank you.
Beltone Research
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